Hunt Consolidated and a group of creditors that sought to buy the Oncor Electric Delivery unit from bankrupt Energy Future Holdings are suing Texas regulators who attached conditions to their merger that caused the deal to unravel.
In a lawsuit dated June 17, the Hunt-led group said the Public Utility Commission of Texas erred in setting conditions that may have required the buyers to share potential tax savings with the utility’s ratepayers. The would-be buyers are seeking to reverse the agency’s March 24 order, according to the lawsuit, filed in Travis County.
The lawsuit comes just a month after the Hunt group withdrew its application to buy Oncor, Texas’s biggest electric transmission operator, saying some of the buyers wouldn’t sign off on the terms set by the state commission. It may threaten to undermine any other offers the utility is entertaining from potential buyers. Florida-based power generator NextEra Energy expressed interest in taking over Oncor as the deal with Hunt appeared to be faltering, two people familiar with the talks said in May.
“If Hunt is successful in court, there’s a chance they would get back to the negotiating table with the debtors and move forward on a deal to buy Oncor,” Julia Winters, a litigation analyst for Bloomberg Intelligence in New York, said by phone on Thursday. “It would be a lot easier to move forward with the plan that was already on the table and approved by the bankruptcy court.”
The sale of Oncor, the regulated utility of Energy Future Holdings, has been seen as key to Energy Future’s emergence from bankruptcy after two years of restructuring almost $50 billion in debt. Hunt’s complex transaction had called for investors to raise more than $12 billion and the cancellation of billions in debt, according to bankruptcy court documents.
“Businesses often file appeals within the court system to preserve their legal rights going forward,” said Hunt Consolidated spokeswoman Jeanne Phillips. “That is the intent here.” Energy Future spokesman Allan Koenig declined to comment.
Hunt’s ability to salvage its bid may largely depend on how long the legal process drags out, Winters said.
“If Hunt were successful before the debtors get very far on a new plan, then I wouldn’t be surprised to see Hunt back at the table,” she said. “That said, for all I know, there’s somebody else like NextEra who’s already got something cooking. Hunt may be too late.”
The state commission has asked that the attorney general represent it in the lawsuit, agency spokesman Terry Hadley said in a telephone interview. “What makes this unusual is they are asking for some type of relief after they backed out of the original application,” he said.